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State Auditor Crit Luallen recently released the annual audit of the financial statements of the Taylor Fiscal Court for the year ended June 30, 2009. State law requires annual audits of county fiscal courts.
The audit found the county's financial statements to fairly represent the county's assets, liabilities and equity arising from cash transactions and revenues received and expenditures paid in conformity with the modified cash basis of accounting.
As part of the audit process, Luallen must comment on non-compliance with laws, regulations, contracts and grants. Luallen must also comment on material weaknesses involving the internal control over financial operations and reporting.
Luallen had the following comments:
The Fiscal Court lacks adequate segregation of duties over Taylor County Animal Shelter billing and receipt. This increases the risk of misappropriation of assets, errors and inaccurate financial reporting.
Because of the lack of segregation, according to the audit, the animal shelter prepared and mailed monthly billing invoices to other counties for housing animals without any review or oversight from the Fiscal Court and/or the county treasurer.
The shelter received checks from other counties for housing animals without any oversight from the Court or treasurer.
Checks received from other counties weren't turned over to the treasurer timely, with one being held for up to two months.
The shelter was allowed to accept and hold checks from customers at their request and retained some for up to four weeks before turning them over to the treasurer.
The shelter does not maintain a receipts ledger, only a manual receipt book.
The shelter does not prepare activity reports to inform the Fiscal Court or the treasurer.
No restrictive endorsement is placed on incoming checks until the treasurer receives and prepares the deposit.
Custody of cash is inadequate. Three shelter employees have access to a locked box with cash inside. The box is housed overnight in a locked box. However, during office hours, the shelter employs inmates, community service workers and volunteers, who all have access to the office.
Luallen's audit suggests that the Fiscal Court develop and implement internal control policies and procedures to address the above issues.
According to the report, Taylor County Judge/Executive Eddie Rogers responded by saying, "I recognize the importance of segregation of duties. Due to having a small staff at the animal shelter, it is hard, but we do our best to continue working on internal controls."
Luallen's audit states that Taylor County Jailer Rick Benningfield should request a refund of $4,951 from the food service vendor for overcharges during the 2009 fiscal year.
The report states that Benningfield did not compare amounts charged with inmate population to determine if the rates were reasonable.
Rogers said, "I will work with the jailer and help him implement the auditor's suggestions."
Benningfield responded and said the jail has been reimbursed.
"We have requested to receive inmate population data along with the invoices so we can be sure we are being charged the correct amount."
Luallen's audit states that Benningfield should also collect sales tax on prepaid phone cards sold to inmates and submit that data monthly to the Kentucky Department of Revenue. The audit states that the tax was collected but not remitted to the Department of Revenue.
"This is the first year of operation for the detention center and the jailer and his staff were under the impression that the vendor they were purchasing the prepaid phone cards from was taking care of the taxes," the audit states. "As a result, the jailer is not in compliance with Kentucky law."
Rogers said, "We applied and received a Kentucky sales tax number. These taxes have been submitted to the state."
The audit also found that the Fiscal Court should improve purchase and procurement procedures, maintain proper records for the public properties corporation capital projects and debt service fund, budget and account for the detention center capital projects and debt service funds, and purchase orders should be prepared and approved for all expenditures.
According to the audit, the County had net assets of $43,061,026 and an ending balance of $5,435,147.
The audit, in its entirety, can be read at www.auditor.ky.gov.